From Home Furnishing Business
Rent-A-Center Cuts 25% of Corporate Staff; Continues to Study Sale
Rent-to-own major Rent-A-Center (NASDAQ: RCII) said it has eliminated 250 jobs at its Plano, Texas headquarters – about 25% of the workforce there – as part of its effort to reduce costs and return the company to profitability.
The company said the move will save about $20 million in 2018, and result in annual “run-rate” savings of about $28 million in future years. Overall, the company is looking for annualized savings of $65 million to $85 million.
The workforce reduction comes on the heels of the elimination of the chief operating officer’s position last month, which put all the company’s operations under the control of CEO Mitch Fadel.
“As we outlined just two weeks ago, Rent-A-Center is implementing initiatives to reduce costs and improve performance. While major reductions in work force are difficult, we are confident that Rent-A-Center will be better positioned for long-term growth and profitability,” said Fadel. “Additionally, we remain focused on delivering a more targeted value proposition and look forward to building on our momentum from our January and February performance.”
Fadel said same-store sales continued to improve sequentially, with January and February same-store sales representing the strongest months since February of 2016. In addition, pricing changes at its core U.S. stores, a key part of the company’s growth strategy, are set to take effect today, he pointed out.
He said Rent-A-Center remains focused on driving revenue through a more targeted value proposition and customer focus, and has recently rehired Ann Davids as chief marketing officer.
Additionally, the company said its board of directors is continuing to explore strategic and financial alternatives, including the possible sale of the company. The board and its financial advisers currently are evaluating proposals from bidders, and they expect to decide whether to continue pursuing a sale during the second quarter.